BUDAPEST, Feb 17 (Reuters) - Hungary's second-largest bank K&H said on Thursday it saw household non-performing loans rise further this year, partly as the government has yet to present plans to help borrowers and end an eviction moratorium.
"Corporate non-performing loans have reached a peak and we are going down from that peak," K&H chief Hendrik Scheerlinck told a news conference. "But in retail lending, bad loans continue to rise, albeit at a slowing pace."
At K&H, a unit of Belgium's KBC Group, 8.6 percent of household loans were overdue at the end of 2010, up from 5.5 percent in 2009, a sign that a nascent economic recovery in Hungary did not easily translate into improving loan portfolios.
Scheerlinck added it was difficult to gauge when household lending could improve as a moratorium on evictions continues and banks still know nothing about the government's plans to help bail out borrowers who are unable to pay their mortgages. "We expect the government to come forward with a proposal that we can discuss," he said. "We have seen nothing yet."
Hungary's loan holders have suffered in the recent economic crisis as more than half of the country's commercial loan stock is denominated in foreign currency, predominantly in Swiss francs.
For most of 2010, the franc was some 40 percent stronger than levels around CHF/HUF 150 before the crisis, leading to soaring monthly payments and a spike in loans gone sour.
Analysts have said the weakness of the forint, coupled with the extended duration of these levels, could further damage portfolio quality and necessitate elevated risk provisioning.
K&H set aside 36.7 billion forints ($185 million) in risk costs in 2010, 9 percent below 2009 levels but still "very high", Scheerlinck said.
The bank's net profit, adjusted for hefty one-off litigation expenses, showed a 12.8 percent improvement from 2009 despite a windfall bank tax introduced last year that eroded the bottom line by 15 billion forints.
That is mostly the result of a 17 percent rise in interest income, which K&H booked as it opted to stay out of lending in risky areas such as construction or retail real estate, and keep a highly competitive race for deposits at arm's length. ($1=198.30 Forint) (Reporting by Marton Dunai; Editing by Jon Loades-Carter)